Sunday, March 10, 2013

Fib extension points to 1582-86 as end of rally

In a previous post [here], I used Fib extensions on impulses in the direction of the trend since 2009 bottom to arrive at a possibility of 1583 being the end of the road for this rally.

In this post, I apply the same methodology on a shorter time frame, specifically since Oct '12 to see if it validates the conclusions from the previous post.

In the attached chart, you see at least 5 waves in the direction of the predominant trend marked A, B, C, D and E. There is another wave C* identified in Red. I will go into details later.

You can see that -
  • B is 161.8 extension of A
  • C is closest to 127.2 extension of B (but misses by 20 points leaving me to question the relationship)
  • D is 127.2 extension of C
And we are now currently in E.

If E is 127.2 of D, then the end of the road for this rally should be around 1582.

However, I do not like the large gap in the fib extension between B and C. Perhaps, it is because B and C are not related. It is quite possible that C, D, E are waves in a larger wave C* that holds a relationship with B.

If so, C* should finish at 1586 or thereabouts.

So, we have two targets 1582 and 1586 from this post and 1583 from the previous post. Targets are taken from different timescales and they line up. All indicating that 1582-86 could be the end of the road for this rally.

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